Rupee lost by 7 paisa against dollar: What makes this difference between the values of currencies (one strong and the other weak)

Rupee lost by 7 paisa against dollar

What makes this difference between the values of currencies:  one strong and the other weak

We start from very basic. Every country has their land, labor, capital, manufacturing, production, distribution, final goods and services. Now these all and they're working depends on various factors in which they grow, work, compete and survive. These factors are natural resources, working conditions, technical advancement, social conditions etc. These all factors and their processes involved in an economy. So we can say the economy is a process in which we invest our resources in minimizing way to achieve maximum fulfilling of needs and benefits.

Now we will talk about what indicate an economy. There are various factors of a community or a country which indicates the health of an economy. Some factors are following:

GDP (Gross domestic Product), Prices in the stock market, unemployment ratio, consumer leverage ratio, inflation ratio etc. So these are the some factor whose statics and calculation indicate about the health of an economy.

Now a country with strong economy will have currency of high value. And the country with weak economy will have currency with less value.

Strong Currency means higher the buying power (value) of that currency.

And weak currency means lesser the buying power (value) of that currency.

Up and down in the value of currencies are relative terms. Rupee lost by 7 paisa against dollar in this case we can say dollar strengthen 7 paisa against rupee or we can say rupee weakens 7 paisa against dollar.  The value of one currency is the relative value of another currency.

As we know that currency of an economy with strongest position in the world has to world’s reserve currency which we all need for trading. US (USD) is the strongest economy in the world that’s why we all valuate our currency value in comparison to the Dollar ($).

China (YUAN) is the world’s second strongest economy. But we found that china undervalued (less valuate something in comparison to its real value) its currency. There are some reasons behind it, one is that they want to maximization of export. If they undervalued their currency the market price of their products will be less and hence it is good for their GDP.

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